Virgin Atlantic ‘reviewing its options’ with Flybe

Virgin Atlantic has said it is “reviewing its options” with regard to regional carrier Flybe as takeover speculation mounts.

Flybe put itself up for sale earlier this month as financial constraints mounted in what it branded a “difficult” trading environment.

In a statement Virgin Atlantic said: “Virgin Atlantic notes the recent media speculation related to Flybe.

“Virgin Atlantic has a trading and codeshare relationship and confirms that it is reviewing its options in respect of Flybe, which range from enhanced commercial arrangements to a possible offer for Flybe.

“Virgin Atlantic emphasises that there can be no certainty that an offer will be made nor as to the terms of any offer.”

Shares in Flybe rose 45 per cent on the news.

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Flybe earlier this month said it was in discussions with several strategic operators about a potential sale.

The carrier is Europe’s largest regional airline and flies more UK domestic flights than any other.

A deal with Flybe would allow Virgin Atlantic to explore opportunities to provide to feeder traffic into its long-haul network.

It would also offer access to valuable take-off slots at Heathrow Airport which are ring-fenced for domestic flights.

Any potential deal would come four years after Virgin Atlantic failed to break the domestic market with its carrier Little Red.

Flybe currently operates 204 routes serving 15 countries from 80 departure points in the UK and Europe and is the largest scheduled airline by air traffic movements at Aberdeen, Belfast City, Birmingham, Cardiff, Exeter, Isle of Man, Jersey, Newquay and Southampton airports.

The airline operates a fleet of 78 aircraft – 54 Bombardier Q400, eight Embraer E195, 11 E175 and five ATR 72s.

Rothschild, the investment bank, is advising Virgin Atlantic on its interest in Flybe.

Although an offer from Virgin Atlantic for Flybe would not be large in monetary terms, it would be a significant combination in a British aviation sector which is viewed as requiring further consolidation.

Flybe has a market capitalisation of £20-30 million.

Over past 18 months both Monarch and Primera have disappeared from British skies, with rising fuel prices putting pressure on the sector.

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